FINANCIAL DECISION MAKING

Financial Decision Making

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Introduction

This work has been performed in order to meet the guidelines of the assignment. On all areas that are based on the fact that these decisions depend on the success or failure of the organization or department where the taking is discussed. Knowing that the current situation of the country lies in uncertainty in projections of the company that are unpredictable by economic, political, social world is affecting the economies of countries. Decision making is not an aspect which can be exercised with less knowledge, so it is very important that any manager or person holding similar position is necessary before making a decision to make an analysis of external and internal variables can affect the normal development of the activities of a company or business. For this reason it is necessary to the proper study the issues presented as the objectives, and characteristic of decision making that are a significant part for having a positive outcome of the decision made.

Discussion

Financial Decision Making

"Financial decisions can be grouped into two broad categories: investment decisions and financing decisions. The first group is concerned with decisions on what financial resources will be needed, while the second category relates to how to provide the required financial resources". More specifically the corporate financial decisions must be made on: investments in plant and equipment, investments in money market or capital market, investment in working capital, seeking funding for equity or debt capital (debt) fundraising in the money market or capital market. Each of them involves even more specific aspects, for example decisions on the level of cash or above the level of inventory. It is necessary to study the various interrelationships between these two major types of financial decisions. The way individuals make decisions in organizations and the quality of choices they make are influenced primarily by their perceptions, their beliefs and values. Decision processes in organizations are very important because they usually affect all human processes within them.

Question 1

Profitability Ratios

Measure the company's ability to generate wealth (financial and economic performance). Measure the utility generating capacity by the company. Aim to assess the net result from certain decisions and policies in the administration of company funds. Evaluate the economic performance of the business. Express the company's performance in relation to sales, assets or capital. It is important to know these figures because the company needs to produce profit to exist. Directly relate the capacity to generate funds in short-term operations. Profitability relates to a firm's ability to produce a reasonable profit so that the shareholders and investors will keep providing capital to it for its operations. A firm's profitability is connected to its liquidity, for the reason that earnings eventually produce cash flow. For these rationales, profitability ratios are imperative to both potential investors and shareholders.

Net profit Margin

Fundamental analysis ratio of net profit margin is calculated by dividing the ultimate profit of the company by revenues. Increase your profit margin (return on sales) from year ...